A Beef with Politics

Concessions to South Korea would be a psychological blow to the U.S. beef industry, argues DTN Livestock Analyst John Harrington.

Things were really looking up in April — it was the first step to opening up export potential, when South Korea agreed to accept U.S. bone-in beef exports from animals 30 months of age or older as part of a deal to gain acceptance of a much-wanted free trade agreement, Harrington told me.

“It’s kind of curious whether that political situation over there is that dicey that they’ll jeopardize passage of FTA,” Harrington said. News reports from Seoul today said opposition parties said they would boycott the legislature to pressure South Korean President Lee Myung-bak to renegotiate the deal.

Claiming to be fearful of the safety of U.S. beef, opponents have staged demonstrations against the admission of beef from older cattle.

“It would be a psychological blow if we have to concede the 30-month rule for South Korea. Bone-in beef was important, but for the broader export effort, it was really critical to get an agreement with a major player that had no age requirement. If we’re going to go back to only younger cattle, it’s really a nasty kick to export progress.

Harrington’s hope was to get South Korea to respect global meat safety standards as a step towards getting Japan to raise its bar above 21 months. “If we don’t get South Korea to budge on age, Japan will dig in its heels even more,” Harrington said.

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“It’s also curious because that’s bad news in terms of demand. But these vaulted premiums in deferreds don’t seem to care,” he added. “If I was long the deferreds, which are as much as $13 over the spot market and somebody told me discouraging demand news, I’d be concerned. But the Board is telling you, ‘Don’t worry, be happy!'”